Tag: reconstruction

For Afghan Reconstruction, Millions of Dollars Up in Smoke

Unconscionable levels of waste, fraud, and abuse continue to plague America’s 11 year nation-building mission in Afghanistan. According to an investigation by the Special Inspector General for Afghanistan Reconstruction (SIGAR), officers with the NATO training mission shredded the financial records of fuel purchased for the Afghan National Army. As a result, “the U.S. government still cannot account for $201 million in fuel purchased to support the Afghan National Army.”

On the document destruction, SIGAR investigators determined among its many findings that:

  • The two fuel ordering officers cited efficiency, saving physical storage space, and the ability to share document [sic], as factors in the decision to scan and shred the documents. They added that they believed that the scanned documents had been stored electronically on a [Combined Security Transition Command-Afghanistan (CSTC-A)] SharePoint portal or shared drive, but they could not recall the exact locations.
  • […]
  • … CSTC-A was unable to locate any of the missing documents.

A number of other projects underscore the problems U.S. agencies confront in carrying out large-scale development initiatives. For instance, the U.S. military plans to provide electricity via diesel generators to about 2,500 Afghan homes and businesses around Kandahar, according to a report over the summer by the Washington Post’s Rajiv Chandrasekaran. U.S. government planners expect the program, called the “Kandahar Bridging Solution,” to cost American taxpayers about $220 million through 2013, that is, until the United States Agency for International Development and the U.S. Army Corps of Engineers build a new hydropower turbine at a dam in neighboring Helmand.

Washington planners, in keeping with their population-centric counterinsurgency doctrine, assume that many Afghans will be pleased to have power, and thus, will throw their support behind the Afghan central government. Instead, U.S. Army Maj. Gen. Kenneth Dahl, the deputy commander of U.S. forces in Kandahar last year, found no evidence that the added electricity was yielding greater support for the government, a conclusion far from surprising. Moreover, Dahl also discovered that the turbine at the dam will provide residents with less power than what they currently get from the generators. As SIGAR noted, “the U.S. government may be building an expectations gap.”

Yet another in a laundry list of dashed expectations may soon be the new $23 million road in Helmand, dashed because the Afghan government has yet to compensate landowners for buildings and property demolished during construction.

The United States continues to expend money and lives for stabilization efforts and infrastructure projects that may still fail to leverage Afghan support for the government. At its heart, that failure lies not only with the mission’s overlapping, redundant, and expensive development strategies, but also with the underlying assumption that when armed with “performance-based contracts” and “metrics to measure achievement,” government bureaucracies can successfully plan such projects.

Chilean Government Now Wants Higher Taxes on Junk Food

Following Rahm Emmanuel’s advice of not letting a crisis go to waste, the new center-right government in Chile now wants to extend the permanent rise in tobacco taxes—supposedly adopted as a measure to finance post-earthquake reconstruction—to foods with high concentrations of salt and trans fat [in Spanish]. Jaime Malañich, the Health Minister, said that the earthquake is opening up an opportunity to implement a measure that would increase the government’s revenue and fight obesity and that has been considered for many years.

My colleague Ian Vásquez wrote a few days ago that, by announcing unnecessary tax increases as post-earthquake reconstruction measures, the recently-inaugurated administration of Sebastian Piñera was quick to disappoint those who expected a bold move toward strengthening free market policies that have made Chile a Latin American success story. If these announcements are any guide, expect more disappointments.

A Disappointing Start in Piñera’s Chile

The presidential election in Chile that brought Sebastián Piñera to power last month was good news for Chile and the region. It confirmed once again that Chile is Latin America’s most modern country, one in which Chileans chose a center-right candidate to lead the country after 20 years of center-left governments that by and large stuck to the free-market model set in place in the 1970s and 1980s and that has made the country one of the most economically free in the world. In Chile, what’s at stake in presidential contests is not a radical change of the rules of the game, but rather policies that build on or depend on high growth. Chile’s mature democracy and economy serve as a model for Latin America.

But in just over a month of being in office, Piñera has made two decisions that disappointed his supporters both inside and outside of Chile who believed that he would reinvigorate the Chilean economy and stand firmly against the populist-authoritarian model that Hugo Chávez has exported to the region. Piñera backed the re-election of José Miguel Insulza to head the Organization of American States and has proposed a tax increase on large companies. Insulza and the OAS are widely and correctly viewed as having been silent, incompetent or complicit in the face of repeated violations of basic democratic and civil rights by populist governments in the region. Whatever the domestic political reasons for Piñera’s decision, countless Latin Americans who cherish their rights—not the least of whom are Venezuelans, Hondurans, Bolivians and Ecuadoreans—were disillusioned by the endorsement of Insulza.

On Friday, Piñera proposed to “temporarily” raise taxes on large companies from 17% to 20% (and to increase mining royalties and to permanently increase tobacco taxes) to finance Chile’s post-earthquake reconstruction needs. But a number of Chile’s leading economists are criticizing the tax increase and point to other sources of revenue that would be less damaging to growth. Hernán Büchi, a finance minister in the 1980s, and Luis Larraín, head of Chile’s free-market think tank, Libertad y Desarrollo, have both written op-eds in recent weeks pointing out that one of the country’s main problems has been the steady drop in productivity in recent years. Piñera was elected on a platform to increase productivity. A tax increase would aggravate the problem. According to Büchi, 20 years of center-left governments reduced Chile’s ability to eliminate poverty and followed a path that was politically easy and consistent with their ideology: “It would be a bad omen if the first measures of a government that should represent change in this regard, went down the same path.” Larraín adds that the tax decision will reveal Piñera’s governing approach, in which there is a real danger of avoiding necessary reforms and a president content with simply being a better administrator. We shall see.

Vikings and Pirates and Taxes, Oh My!

Today’s episode of “Hagar the Horrible” could be an epigraph for the new Fall 2009 issue of Cato Journal.

Hagar_The_HorribleThis issue includes Greek economists Michael Mitsopoulos and Theodore Pelagidis on “Vikings in Greece: Kleptocratic Interest Groups in a Closed, Rent-Seeking Economy” as well as Peter Leeson, author of The Invisible Hook: The Hidden Economics of Pirates, writing (with David Skarbek) on the effects of foreign aid. As for taxes, well, editor Jim Dorn has assembled a number of useful papers:

  • Andrew T. Young on taxing, spending, and “fiscal illusion”
  • Michael J. New on the “starve the beast” hypothesis
  • Alan Reynolds on Paul Krugman’s misunderstanding of the monetary and fiscal lessons of the Great Depression and Japan’s lost decade

And on the general rapaciousness of the state, don’t miss Jason Kuznicki’s careful review of government racial discrimination from the end of Reconstruction until the civil rights movement.